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HOSTING A TOTAL OF 318 FORMULAS WITH CALCULATORS

Ordering Cost

Ordering cost is also known as procurement cost or acquisition cost. It includes cost associated with the processing and follow up of the purchase order. Generally the expense of following activities are included in ordering cost.

  • Preparation of demand letter material from various departments
  • Inviting quotation from various suppliers
  • Selection of proper supplier
  • Flotation of order
  • Follow up of orders
  • Inspection of goods at the time of its receipts.

In short,ordering cost includes cost of paper work and postage involved in placing the order, cost of inspection and cost of accounting and making payments.

(r/q)*c

Here,r=annual requirement of material in units,q=quantity per order,c=cost per order.

ENTER THE VARIABLES TO BE USED IN THE FORMULA